Adv. Michal Cohen, Commissioner of the Competition Authority. Now coming? (Photo: Israel Competition Authority website)
The storm that has erupted in the Competition Authority since Economy Minister Nir Barkat asked the Commissioner of Competition, Adv. Michal Cohen, to resign, has not calmed down.
The mood in the PA has risen to a stormy point: Almost a week has passed since Barkat began the process of removing Cohen from her position, due to his dissatisfaction with her performance – or rather, her dysfunction, and suddenly, after two years of laxity and discussions about a vacuum, the Supervisor decided to take action, and announced that she was examining why the banks were careful to charge maximum interest on credit and give minimum interest on current accounts.
The proximity of time between Cohen's hearing and the announcement of the examination seems like a desperate attempt to remove the sword from her neck, that is, if she puts the banks at the forefront of her joy, the minister will see her virtues and understand that she is ineffective. But the sweat is evident and the timing is poor.
Economy Minister Nir Barkat. It is a pity that there were those who were quick to stand against his just demand, regardless of legal legislation or political identity (Photo: official website, Shauli Landner)
Let it be said immediately: "deposit exploitation" is a very worthy topic to deal with, but it burst into our lives already a year ago, when it became clear that the rising interest rate is here to stay. While Cohen woke up from her slumber and began to deal with him publicly (we will immediately elaborate on the importance of publicity) only after the tenth aliyah. That is, after the prime rate is already 6.25%, and after the banks have raked in huge profits and their CEOs are eagerly awaiting a fat annual bonus.
This is the place to explain that part of the Competition Authority's work is to create deterrence. Since it has sharpened tools in its box, such as administrative fines of up to NIS 100 million and filing indictments that could result in imprisonment, it can only open it slightly and expose the sharp blades inside, without starting any procedure, in order to straighten out rogue businesses.
But when the competition supervisor pushes him deep into the warehouse, fearing the forces she's supposed to face, they beep at her. This was the case in the "price coordination" affair and now in the "exploitation of deposits."
At the beginning of last week, immediately after the interest rate increase, the Competition Authority passed a requirement to the banks to obtain information about the rollover of the interest rate increase to the public. It turns out that this was the third time that banks were asked to transfer such information. The start of the examination was in April. Only in September, five months later, were the banks required to transfer material. The investigation was completed in March and now, at the end of May, they have again been required to hand over materials.
What did the supervisor do with the data she received last year? God knows. Moreover, in the background are clear data from the Bank of Israel, according to which the banks raised the interest rates on loans by a much higher rate than on the interest rates they grant the public on deposits. I mean, the bottom line was smeared red on the wall.
Is it understandable that she needs to collect the data herself, and not rely on others, but three rounds of tests, over the course of a year on the same subject, with nothing done in between? And with that she wants to convince the minister that she is fulfilling her role properly?
It only reinforces his desire to send her home. After all, this was exactly the claim against it, in the price-fixing investigation that the PA opened more than a year and a half ago: you collected data, you investigated, and again you collected data and investigated, and again and again, and nothing substantial happened, except that the interrogees received, perhaps, a better opportunity to defend themselves...
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The exploitation of deposits could have been halted much earlier, had the Competition Authority announced a public examination (Photo: ShutterStock)
Given the slowness of the authority, one can only imagine what would have happened if the Commissioner had made its examination public, say, in September. The banks would pull the handbrake immediately, as they do whenever the Supervisor of Banks sends a veiled threat about the amount of interest they charge on mortgages, for example.
Miraculously, all of a sudden, they are launching special promotions to absorb interest rate increases for borrowers. Because that didn't happen, they continued to earn twice on deposits—both at the interest they charge and when they use that money as a source of loans at record interest rates.
And now let's move from imagination to our grim reality: the public knows that it cannot pin its hopes on the Competition Authority, because by the time the "checks" it conducts may ripen into something like a fine or an indictment, the interest rate in the economy will have already returned to around 2.5% and will no longer be needed.
In any case, those close to the Minister of Economy reported that the process of removing the Commissioner of Competition, Adv. Michal Cohen, is continuing with full force. The grip on bank funds won't help either.
And we must also say a word about the embracing envelope that chose to target Cohen, an envelope composed of other officials and opponents of the legal legislation, who, at least in this case, operate on automata and cry out that they are trying to weaken the gatekeepers here. Not her: this is a gatekeeper who chose to be very weak in the first place.
- money
- Opinions
Tags
- competition
- Antitrust Commissioner
- Nir Bareket
- Minister of Economy
- Price coordination
